THE BUSINESSTIMES – THE Singapore government will reduce the maximum tenure for public housing loans to 25 years from 30 years in a series of measures to stabilise the resale market.
The mortgage servicing ratio limit will also be reduced from 35 per cent to 30 per cent of the borrower’s gross monthly income, the Ministry of National Development and the Housing & Development Board said in a statement on Tuesday, 27/8/2013.
“These measures are in line with those introduced by the Monetary Authority of Singapore (MAS) to encourage financial prudence among borrowers, which is especially important given that the current low interest rate environment is unlikely to be sustained,” according to the statement. < VERY BIG HINT that interest rate is going up soon. >
The MAS will reduce the maximum tenure of new housing loans and refinancing facilities granted by financial institutions for the purchase of HDB flats (including DBSS flats) to 30 years from 35 years. New loans with tenures exceeding 25 years and up to 30 years will be subject to tighter loan-to-value limits
Still can’t figure out how much it affect HDB buyers? Let’s take an example of a couple having a HDB loan of $400,000 for 30 years at a interest rate of 2.6%. Their current monthly installment will be around S$ 1,601.36. But with the new cooling measures, buyer can only take a maximum of 25 years public housing loan instead of 30 years, their monthly installment will be S$ 1,814.68 instead. An $213.32 or 13% increase in monthly installment. Well the $213.32 is enough to pay for your monthly utilities bill.
Meanwhile, with immediate effect , Permanent Residents (PR) who want to buy resale HDB flats will have to wait three years after receiving their PR status. Prior to this change, they could buy a flat as soon as they received PR status. This is indeed a big blow for PR holder. Will this measures push new PR holders to go to private residential market? Hmm , we shall see.
What’s very sure is that the HDB resale market will be damn COOL this 2 months due to the knee jerk effect.
- HDB COV $20000, lowest in 30 months, since 2011 (paulngproperty.wordpress.com)
- HDB launches more than 500 two-room flats, Single Singaporean can apply. (paulngproperty.wordpress.com)
- A rough guide to buying an HDB for single Singaporean. (paulngproperty.wordpress.com)
- Release of 2nd Quarter 2013 Public Housing Data (paulngproperty.wordpress.com)